Pound down on Retail Sales – GDP figures today.

Good Morning. The pound fell yesterday after the Retail Sales figures were slightly worse than expected & a Bank of England policymaker said quantitative easing could be extended if necessary. Sterling has risen again this morning. Rates at 08:30am stand as follows:

  • GBP/EUR 1.1101
  • GBP/USD 1.6690
  • GBP/AUD 1.7996
  • GBP/NZD 2.2048
  • GBP/CHF 1.6779
  • GBP/CAD 1.7520
  • GBP/ZAR 12.378
  • GBP/JPY 153.12
  • EUR/USD 1.5029

Retail Sales

Retail sales showed no growth in September, confounding expectations for a 0.5 % increase, while the annual rise of 2.4 %was below forecasts of a 2.8 percent increase. The worse than expected figures caused Sterling to fall from 1 month highs against the US Dollar and Euro.

Bank of England

Bank of England figures also released on Thursday showed that lending to businesses improved sharply in August but still remained negative. Some analysts reckon the sluggish lending and demand for credit, together with a bleak outlook for the public finances means sterling’s upside should be limited.

“The retail sales number speaks volumes to me and the state of this economy is getting worse. Forget any rise in rates anytime soon as inflation is way in the future,” said Maurice Pomery, managing director at Strategic Alpha in London.

Sterling hit its one-month highs versus the dollar and euro this week in part boosted by BoE policy meeting minutes which investors had viewed as a sign that an extension of its 175 billion pound quantitative easing next month was less likely.

The minutes were seen as consistent with comments from BoE Governor Mervyn King, who was quoted on Wednesday in Scottish newspaper The Herald as saying rates could not stay at record lows indefinitely and would have to return to more normal levels eventually. However, BoE Deputy Governor Paul Tucker’s comments in an interview with The Scotsman newspaper on Thursday gave a market that is still broadly bearish on the pound an excuse to sell again.

Gross Domestic Product

The Gross Domestic Product figures are released at 09:30am this morning. It is a measure of the total value of all goods and services produced by the UK. The GDP is considered as a broad measure of the UK economic activity and health.

We expect the figures to show that Quarter on Quarter, the economy grew by 0.2%. The year on year figure is expected to show a decline of -4.6%. If the figures are better than this, then the pound may gain further. If figures are worse however, we could see the recent gains for the pound wiped out.

GDP often causes big swings in exchange rates as it shows if the economy is growing. The Twitter update sidebar in this blog is updated several times throughout the day, so do check back to see what the figures were, and what effect this has on exchange rates.

If you would like to fix a rate before this data, and protect yourself against adverse movements, then Open an account with us today. It’s free to do, without obligation, and you can then challenge us to get you a better deal than your bank or other insititutions.

Enjoy your weekend.

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